Zalando overcomes tough October, will focus on growth

German online fashion retailer Zalando said it would push ahead with its strategy of investing to gain market share in 2018 as it reported preliminary fourth-quarter sales growth and operating profit in line with analyst expectations, despite a tough clothing market in early autumn.

Zalando said quarterly sales rose between 21.2 and 23.2 percent to €1.323 billion to €1.345 billion ($1.62 billion to 1.64 billion), compared with average Thomson Reuters Eikon analyst expectations for €1.345 billion.

It said adjusted earnings before interest and taxation (EBIT) should come in between €107 million and €120 million, compared with mean analyst forecasts for €114 million. It reports full results on March 1 along with forecasts for 2018.

As Amazon has made a big push into fashion, Zalando has been investing heavily in logistics and technology, denting its profitability and prompting analysts to question its medium-term target to improve its operating margin.

Co-CEO Rubin Ritter said: “We pulled off a strong finish to the year, despite a challenging October. In 2017 we delivered on our promise of profitable growth. We are excited to continue on this path also in 2018 and beyond. Our focus will remain on strong market share gains, facilitated through continued investments.”

Additional reporting by Sandra Halliday